Labour, Lib Dem and Green London Assembly members have joined forces to implore Mayor of London Boris Johnson to reconsider plans to charge developers at Elephant & Castle a levy to fund Crossrail.

Last month we reported on Southwark Council's concern that a plan by Boris Johnson to raise £300 million towards the cost of Crossrail from office developers in the Central Activities Zone (CAZ) would deter developers from building at the Elephant & Castle and hamper much-needed transport improvements.

The Mayor wants to change the London Plan to allow him to demand contributions towards the east-west rail link from the promoters of large office developments in central London.

Developers in north Southwark and north Lambeth would be stung for the Crossrail levy even though the proposed rail link doesn't come near either borough.

Now three London Assembly members – the Green Party's Jenny Jones (who is also a Southwark councillor), Lib Dem Caroline Pidgeon (who also represents Southwark's Newington ward) and Labour's Valerie Shawcross (the constituency member for Lambeth & Southwark) have written a joint letter to Boris Johnson highlighting their "serious concerns" and urging him to reconsider.

They argue that including Elephant & Castle in the Crossrail levy area "could be the final straw in the viability of the scheme".

The letter continues: "The amount of money you would raise at the Elephant & Castle would be minimal in the overall project, but could halt the much-needed regeneration. There is so much to put right at the Elephant & Castle. It seems absurd that one important scheme could cause a serious setback to another."

Mayor: I'll do all I can to see regeneration goes ahead

The Mayor argues that Crossrail and the Elephant & Castle regeneration need not be mutually exclusive.

"The Mayor wants to ensure that local people and businesses in Elephant and Castle are able to enjoy the benefits of both regeneration of the area and Crossrail, and he intends to do all he can to make sure both happen," said a spokesman for Boris Johnson.

"Crossrail will relieve congestion on the rail and Underground networks all over the capital, and not just in places that are directly served by the line. That is why the Mayor has put forward proposals to use the planning system to seek financial contributions for Crossrail from major new office developments – which give rise to additional congestion – in the Central Activities Zone. This area includes Southwark, which will particularly benefit from reduced congestion on the Jubilee Line when Crossrail is up and running.

"Each case will be looked at carefully on its merits, and factors like the viability of a scheme will be carefully weighed when decisions about contributions are taken."

Lend Lease deal still not signed

Southwark Council's forward plan now indicates that the signing of the crucial development agreement between the authority and Lend Lease has slipped to May 2009 – 17 months behind the original schedule. The council continues to attribute the hold-up to Transport for London delays in providing cost estimates relating to the rebuilding of the Northern line tube station at the Elephant.

"TfL is working with the London Borough of Southwark and the developer designate (Lend Lease) on a multi-modal feasibility study of the Elephant and Castle including possible changes to the underground station," said Boris Johnson in a written answer published last week. "This work is not complete. Initial qualified cost information will become available in January 2009, with further information to follow through in summer 2009 when the full study report is scheduled to be completed."

The early housing sites were originally intended to rehouse the tenants of the Heygate Estate. It now seems likely that the Heygate will be empty before any of the current crop of schemes has been built.

The organisers of the meeting are calling for local people to have some input into the redevelopment of the cleared Heygate site before the Lend Lease deal is signed.